More on my fiction writing

March 14, 2012

Green shoots in the desert?

Some old timers still blame a December 1988 Barron's article ("Phoenix Descending") for the collapse of the city's real-estate boom. This is fantasy, of course: The market caved in on its own, pulled down by too many hustles, too much overbuilding and the savings and loan scandal driven by local steward Charles H Keating and his pet senators. Now Rupert Murdoch's Dow Jones has tried to make amends with a Wall Street Journalstory about Phoenix's "nascent real-estate rebound." Indeed, it "holds lessons for the rest of the country." Another fantasy?

The Journal continues:

Phoenix has found a viable formula. Low prices are igniting demand from first-time buyers and investors who are converting the homes to rentals. The local economy is on the upswing with several big employers like Amazon.com Inc. and Intel Corp. hiring again, which is further increasing demand for housing. And the region is benefiting from a surge of buyers from Canada who are using their favorable exchange rate to scoop up bargains in the desert.

Could this be true? Has long-suffering Phoenix "found a bottom" and is beginning a rebound? As Zhou Enlai may have said when asked about the significance of the French Revolution: It is too soon to say. What it means about the metropolitan area's real competitiveness and future is murkier still.

As for housing, bear in mind these essentials: Few cities were harder hit by the housing collapse, with prices falling 55 percent and the foreclosure rate hitting third worst in the nation. Also, more than 52 percent of borrowers are still underwater, owing more on their mortgage than their house is worth. The Arizona Republic's Catherine Reagor reports that investors (read speculators) are rushing into the market, crowding out real home buyers. The shadow inventory of bank-owned properties is unknown, so it's difficult to predict whether a real bottom has been found, much less that prices will rise. Of course, location always matters most, so a rare historic home in Midtown will command a price that a tract house in the exurbs won't. And repairing the damage where hundreds of thousands were financially ruined will take years, even if housing is slowly recovering.

This hardly means the good old Growth Machine is sputtering back to life. The old model, where easy credit, liar loans, massive population increases and industrial-scale laying down of spec housing, strip malls and other development remains broken. An uptick in housing interest won't change it. More importantly, if it did, a return to business-as-usual would be the worst possible outcome for Phoenix's future.

The boosters are not interested in Phoenix's real competitive situation. "Positive" data and anecdotes are thrown out. Back in the "good old days," metro Phoenix made top lists, but only in job creation and housing starts — and the jobs being created paid low wages. Another trick is always to compare Phoenix and Arizona against their past performance. There's rarely useful context or an effort to benchmark against peer cities. For example, venture capital "is up." Or not: Arizona received $132 million in VC in 2011, according to Dow Jones Venturesource, vs. $166 million in recession-ridden 2010. But here's the context: Seattle companies netted $135 million — in the fourth quarter of last year, and not an especially strong performance. All of Washington state, similar in population to Arizona, received $542 million in VC in 2011. Ignorance is useful to the ruling elites and perpetuating the status quo.

Phoenix wasn't even in contention in the new Hot Spots report by the Economist's well-regarded Intelligence Unit. It examined 120 cities, using 31 indicators as well as in-depth interviews with business and political leaders. The goal was to produce a gold-standard benchmark of the world's most competitive cities. Only 15 out of a total of 60 global hot spots are in North America: New York, Washington, Chicago, Boston, Toronto, San Francisco, Vancouver, Los Angeles, Montréal, Houston, Dallas, Seattle, Philadelphia, Atlanta and Miami. These are the cities that make the grade to prosper and succeed in our new century of discontinuity. As the report states: "Size alone does not determine a city’s growth potential ... Competitiveness, however, is a holistic concept. While economic size and growth are important and necessary, several other factors determine a city’s overall competitiveness, including its business and regulatory environment, the quality of human capital and indeed the quality of life. These factors not only help a city sustain a high economic growth rate, but also create a stable and harmonious business and social environment." Does this penetrate the booster craniums in Phoenix?

No. Obviously. The Kooks never tried to "get" economic development. They undermined the old state Commerce Department at every turn, failing to give it the toolbox of incentives that have worked nationwide. Instead, they replaced it with a "public-private" Commerce Authority controlled by the Real Estate Industrial Complex. Its mandarins tell the press it "is offering what it believes to be the nation's largest pool of innovation grants — $3 million — to create more home-grown businesses, speed the commercialization of inventions and help existing small businesses grow and add jobs." But what does that mean? South Carolina promised Boeing some $900 million in incentives to land a 787 production line. Austin spent $4 million to attract an eBay support center. These attracted established, large-scale employers. And what about support for Science Foundation Arizona and the Phoenix Biosciences Campus, which would be real job/innovation machines? In reality, the Commerce Authority is simply a target-rich environment for investigative reporters, agreeing to pay its first director an astonishing $1.25 million. The Greater Phoenix Economic Council is toothless and now torn apart by the appetites of the East Valley and the west side, all to the detriment of Phoenix. It was only effective when first established, under the dynamic leadership of Ioanna Morfessis and backed by major corporate leaders, now all gone.

The results were on display with the "competition" to win a new Apple operations center. The center and its 3,600 jobs went to Austin instead, a city that already boasts an impressive tech ecosystem utterly lacking in metro Phoenix. Austin, which knows how to play the eco-devo game, is giving Apple $8.6 million among other incentives. Just peddling sunshine, land and lots of tilt-up spec buildings won't cut it. This reality is not new. I can't tell you how many times I was told in the 2000s that "Phoenix is in the running" for some big project, only to see it go elsewhere. Intel is nice, a legacy of real economic-development efforts and Craig Barrett's affection for the Valley. But ask a resident of Phoenix how easy it is to get a job there. As for Amazon, it is creating low-wage warehouse jobs controlled by the well-paid thousands of headquarters employees who will occupy the multiple skyscrapers being built out my window in downtown Seattle.

Thus, a headline in the Republic proclaims, "More Arizona startups taking root." But read on and you learn that just 7,272 Arizona corporations were started in 2011, a 33 percent decline from the number registered during 2007. A banker notes, "New Mexico often has more venture activity than the state of Arizona, yet the population of the Phoenix area is two times the population of New Mexico." Small firms and startups, don't create many jobs. Also, a report by the Business Journal in the 2000s showed that Phoenix actually has much fewer startups per 100,000 people that many smaller cities, much less Phoenix's peers. In any event, the typical startup or tech venture is a rich-man's toy in north Scottsdale or Gilbert, meant to be quickly sold off, not built into the next Amazon, much less have a civic connection to creating a great city.

Then there's the continuing drag of political extremism, which shouts, "Global companies, don't invest here!" One new example is an anti-contraception bill that is the most extreme in the country. As Daily Kos comments, "How many times do we have to say this? Arizona's economy is in the shitter, education was cut a half-billion dollars last year, and 100,000 were just kicked off the state's Medicaid program. And this is what they spend their time on: restrict, restrict, restrict access to birth control, and if we can't restrict it anymore, then let's threaten workers with losing their job."

I don't write this to "make Phoenicians feel bad" or because "I hate Arizona." I do it so people get a clue. The old economic model, such as it was, failed to create good jobs and great companies even when it was performing at its best. It did create very costly externalities and great wealth for a few of the real-estate boyz. Now it's a new world, where slow growth and hyper-competition is the norm, with smart, livable cities taking the prize. A bunch of cheap houses, a few months of delightful weather and championship golf are not an adequate economic strategy for a major metropolitan area.

Comments

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Please stop ignoring the point at issue, phxSUNSfan. The issue is not whether other sites existed, the issue is whether they are on State Trust Land.

The parcel Apple wanted (without any suggestion from Phoenix) is on State Trust Land.

Stanton says of Apple that "State Trust Land did not excite them". He adds "...so there was no other Phoenix site REASONABLY IN CONTENTION".

This means that other sites "reasonably in contention" were also State Trust Land. This, combined with "byzantine" land release rules for property development by the state for such land, may explain, at least in significant part, why places like Chandler have seen much more development of this sort recently than Phoenix.

Ok, but what does that matter in the larger scheme of things? Why does State Trust Land matter so much if both the State and City were serious about being competitive...it doesn't. Fine, there was no other site on State Trust Land; "so what's plan B?" should be the next question already answer when a strong economic development effort is in place.

State Trust Land didn't excite Apple, yes we read that...so again, what site will. Where could a company like Apple locate within the city that would be an attractive site? Near light rail and Sky Harbor yet still close enough to freeways since urban housing stock is in short supply in this region, I'd presume. Why was Apple not made aware of sites other than the ONE in North Phoenix?

Furthermore, a strong and well developed economic development effort would have realized the hurdles that existed on State Trust Land long ago and tackled those issues...or take least had a simple plan in place for removing them once the site was selected for development.

phxSUNSfan, Apple CHOSE to examine that site: it was not "made aware" of it by Phoenix.

How could the city "remove the issue" once the site was selected, if the city was not informed by Apple that it was under consideration? How can the city development machinery trump state law or tell a state agency to drop everything and make an exception whenever the city planner says so?

How about cooperation in an effort to accommodate future economic development endeavors? So really what you are saying is that you simply believe that the location was the only one Apple would consider?

I think that instead of "presuming", you should listen to what Stanton said:

"State Trust Land did not excite them, so there was no other Phoenix site reasonably in contention."

This seems like a problem that needs to be addressed at the state level. Can that be done by a legislature whose ranking Republican members come from districts outside the Phoenix area? Would Mesa or Chandler area legislators revise state law in a way that makes Phoenix more competitive against them? Would legislators in Fountain Hills, Anthem, or rural areas rush to aid urban Phoenix development, or would they sit on their hands for the benefit of their buddies in East Valley sprawlville?

I never wrote that Phoenix made Apple aware of the site. I wrote that if Phoenix had known of Apple's interests it could have been more accommodating and had alternate sites preselected that would be competitive. With the help of a strong economic development resource, the CITY HALL would have been Apple's first stop.

How would the mayor know that there was "no other Phoenix site reasonably in contention" if the city learned of Apple's interest after the fact? I don't remember reading that the Mayor met with Apple to discuss the details. Perhaps you are putting too much stock in one sentence?

"So really what you are saying is that you simply believe that the location was the only one Apple would consider?"

No. Please stop rephrasing my comments in a manner designed to further your agenda.

Now, one might profitably ask, what does "reasonably" mean, in Stanton's quote? Were there sites "unreasonably" in contention? What makes a site reasonable versus unreasonable, in this context? If you can discover this, and post some concrete information, that would be useful.

North Phoenix is no different in terms of sprawl compared to Chandler or Mesa. If anything, the conservative base has strong ties to North Phoenix/Scottsdale; two communities this development would have impacted.

My "agenda" is only stating that Phoenix lacks a serious economic development resource. And yes, I am questioning your inference (from one sentence) that Apple was or would only "reasonably" consider one site. I'm simply don't read that much into a one liner from the mayor who may very well be embarrassed that he wasn't at the table when Apple came to town.

Note that there is a difference between North PHOENIX and Anthem or Scottsdale or some other non-city-of-Phoenix political and developmental entity.

You don't seem to grasp the difference between geography and politics. Lots of municipalities share borders with Phoenix. That doesn't mean they want to change state law to make development in Phoenix easier, since it might take away from their own development.

Apple employs creative type employees. Austin, in the middle of Texas and nine hours from nowhere, is a destination city for creative type employees. Why is that the case?

Phoenix, located in a beautiful state within a day drive to the west coast, less than two hours from mountains, a day trip to Mexico, and a short flight to Las Vegas, has difficulty attracting a creative employee pool. Why is that so?

The tax benefits from local government certainly is a factor in city selection for Apple but the ability to attract creative talent no doubt weighed heavily in the location choice.

The state Commerce Authority is a creation of the Republican governor and her legislative cronies. They went headhunting and Apple bit. Hard to say what kind of incentives were offered, or suggested. However, the idea was for the CA to justify itself with this big trophy. So, part of the conditions for the incentives, especially until a decision had been made, was not to inform the City of Phoenix, which had its own resources and agenda and might have stolen the CA's thunder.

I'll let someone else chime in, but I don't buy that argument. There is no way the state would let Apple slip away just because the mayor is a Dem. You don't think Brewer and the rest of the kooks would be out there with Stanton claiming their piece of the pie? Geography and politics? Apple would have located in LD 11...no?

"So, part of the conditions for the incentives, especially until a decision had been made, was not to inform the City of Phoenix, which had its own resources and agenda and might have stolen the CA's thunder." -Emil

That is completely plausible. I'm not stating this to argue with you or simply contradict you, but do you not agree that if Phoenix had a more powerful Economic Development Department with their ear to the ground and nose in the air that Apple would have heard from the City even if the State was trying to keep City Hall out of the conversation?

I didn't say that the state let Apple slip away because the Mayor is a Dem.

I suggested that the state Commerce Authority cut the City of Phoenix out of the information loop as long as possible, using the promise of incentives as pressure to obtain Apple's discretion, because it wanted the trophy itself. The fact that Phoenix city government is Democratic is merely an aggravating factor.

jmav, good points. But there is more to it than that and I think Apple chose Texas, not just Austin, because of the tax breaks (incentives) they will receive. Translation, profits. They chose Austin next in order to satisfy their employees' liberal tastes or to give them the illusion that they are somewhere liberal.

Texas and Arizona aren't that different: Gov. Perry or Brewer? And Texas has gutted their public education system even more than AZ.

And yet, in Apple's own documents submitted to Austin, it wrote that it was also considering Phoenix given its "supply and cost of labor" as well as Phoenix's accessibility to its Cupertino, CA headquarters.

Could a better city development machine have detected this in the works? Could well be. Could the city have approached Apple before the CA? Surely they did.

Don't forget that the state of Arizona may have incentives outshining anything the municipal government of Phoenix has to offer. That may include the State Trust Land (within Phoenix city limits) that Apple was looking at. They could make some sweet offers on that. What would Phoenix have to offer, competitively, that wouldn't bankrupt the city coffers?

Nice discussion. I notice only a couple of you noticed the absurdity of a company with $100 billion in cash, coming to cities with hat in hand looking for a handout. AND the cities falling ovr themselves to give this company with no morality all the cash they ask for.

Corporations, don't worry, no property tax for you for the next ten years.

Citizens, so sorry, raising property tax for you forever and we're going to cut fire, police and education because for some reason we don't have enough of a tax base. Go figure.

To me, it's nuts to be peddling state trust land as your big asset for something like Apple. Putting something like this in the middle of nowhere when there's so much empty land in the heart of Phoenix, right on the light-rail line.

Again, the lack of serious economic development policy combined with the knee-jerk desire to develop empty, fringe land are terrible policy. They especially work against the city of Phoenix. Desert Ridge is a cancer.

And it is because the UT Engineering College along with the Engineering colleges at Texas A&M and Texas Tech that Apple came to Austin. Apple needs a workforce of educated technical professionals and Texas can fulfill that obligation.

Look, you may thing Texans are ass backwards on a lot of issues and you are correct. But looking at your governor and my governor, they are both idiots. However, bashing Austin for recruiting an employer isn't going to solve your problems. Your state has failed miserably to advance higher education and research. I will give ASU and AU kudos for work they have done in space exploration and in the material sciences. Unfortunately, that still doesn't solve your state's education issues.

Intel probably wishes it would have built its last fab in Austin because it has a bigger pool of engineers and technicians. However, the financial incentives and reduced taxes won them over.

"This seems like a problem that needs to be addressed at the state level. Can that be done by a legislature whose ranking Republican members come from districts outside the Phoenix area? Would Mesa or Chandler area legislators revise state law in a way that makes Phoenix more competitive against them? Would legislators in Fountain Hills, Anthem, or rural areas rush to aid urban Phoenix development, or would they sit on their hands for the benefit of their buddies in East Valley sprawlville?"

I AGREE.

"I'll let someone else chime in, but I don't buy that argument. There is no way the state would let Apple slip away just because the mayor is a Dem. You don't think Brewer and the rest of the kooks would be out there with Stanton claiming their piece of the pie? Geography and politics? Apple would have located in LD 11...no?"

I DISAGREE. I think the kooks would do such a thing after all they are willing to destroy America to not let Obama be re-elected.

"jmav, good points. But there is more to it than that and I think Apple chose Texas, not just Austin, because of the tax breaks (incentives) they will receive. Translation, profits. They chose Austin next in order to satisfy their employees' liberal tastes or to give them the illusion that they are somewhere liberal. Texas and Arizona aren't that different: Gov. Perry or Brewer? And Texas has gutted their public education system even more than AZ. "

MAYBE: but, my daughter moved to Phoenix a few months ago. In Texas she taught math to gifted Children in a public school for three (3) times what she is now receiving as a elementary teacher in Phoenix.

"And it is because the UT Engineering College along with the Engineering colleges at Texas A&M and Texas Tech that Apple came to Austin. Apple needs a workforce of educated technical professionals and Texas can fulfill that obligation."

I AGREE This is one of the major reasons why my grandson chose to NOT accept an offer from ASU and Choose the University of Texas, in Austin.

If Apple is so interested in great engineering programs and the number of graduates, why not just remain in California where the schools ranked in the top 10 for Computer Science, Engineering, Programming proliferate?

Bottom-line, PROFITS gleaned off the backs of taxpayers in Austin and Texas. The Apple Campus will be built in sprawling NW Austin...not in downtown or near the UT campus and Austin lacks basic public transit besides a fledgling bus system. The Engineering programs at UofA and ASU are also top tier programs; I don't buy the UT argument.

For all its flaws, which pSf has pointed out, Austin has a real technology ecosystem; Phoenix doesn't. Texas has a congressional delegation that brings home the earmarks for research, etc.; Arizona doesn't.

Gen. Sherman said if he owned Texas and hell, he would rent out Texas and live in hell.

Austin has some outstanding strip clubs, which is where the Austin people would have taken the Apple dignitaries. Apple dignitaries who are normally used to the hairy hippie chicks of the northwest and northern California. All the paperwork for the deal was probably signed in the VIP room of one of the clubs. Done deal.

phxSUNSfan, when I said that Phoenix had no doubt approached Apple before the CA, I meant only that Phoenix is always trying to recruit big companies like that (certainly, the Greater Phoenix Economic Council is) and that Apple has been on their watch list for a long time. That's perfectly consistent with Phoenix being cut out of the loop by the new state Commerce Authority. I have to assume that GPEC was not informed either, since if it were the Phoenix City Manager's Office would have known.

The article reveals that even as Apple was promising Austin (in effect) the right of first option, they were still using the threat of picking Phoenix as leverage to insure the Austin City Council voted to approve its incentives package.

Note also that Apple itself, in the Bloomberg story, states that it rejected Phoenix because "it would be too difficult to get permission to build" on the State Land Trust property.

Stanton learned of the prospective deal two weeks ago, and tried to work with Apple, "but it was too late".

To me, the salient point remains that, in Phoenix, the only land under consideration by Apple was State Trust Land; whereas (apparently) this was not the case in Chandler and Mesa.

Everyone talks about "empty land" in the Phoenix city limits as if Apple had its pick, but nearly all land is owned by someone already, either public or private. The question, in addition to property price and property tax rates, is whether the location, zoning, accessibility, and other issues make it desirable for the particular purpose Apple designated.

The Desert Ridge site was right at the confluence of 101 and Tatum. That makes for easy commuting by car, which may be what most Apple employees prefer (why should they be any different than the general population?).

Housing in the area is much cheaper (and newer) than downtown or central Phoenix because those areas are already built up and have been for a long time. A lot of Rogue readers have yet to internalize the lesson that sprawl occurs because undeveloped land on the fringes is cheaper and makes for cheaper housing. There is also a great deal more urban decay in the downtown and city center. The question of schooling also may appeal to Apple employees and to managers considering living areas for them close to work.

I don't think that the quality of ASU engineering graduates is particularly relevant. The company's Austin workers are "mostly in sales, administrative and finance for the North Americas" (see Bloomberg) and the new operations center looks like more of the same: mostly non-technical jobs.

phxSUNSfan, I did graduate from UA and I appreciate that you got back on topic. Ad hominem attacks aside, you and Serene Cannibal were just being dicks above. ASU's school of sustainability is an asset, as is the sudden increase in research funding. Meanwhile, UA has been doing a great deal that we should acknowledge as beneficial -- primarily through their research and engineering innovations (like building new semiconductor crystals in their optics labs, for instance, which help bring cheaper solar panels). Let's not attack what's good in our state. Let's stick with going after all those unwilling to take on the hard stuff that might actually make this place better.

An article in the Arizona Republic's Business section on Sunday makes my point for me:

"If they don't mind rising fuel costs and driving stress, workers today can live in areas where housing and living costs are lower and commute to areas where salaries are higher."

The article reports the findings of the Rudin Center for Transportation at New York University, which found that Tucson-Phoenix ranked first in the nation in the number of "super-commuters".

A figure of 54,400 was given, but it's unclear if this was daily, since as the report itself points out, "the super commuter typically travels once or twice weekly for work, and is a rapidly growing part of our workforce", with computers and other remote devices allowing work from home (or at least the home city) the rest of the time.

The question of how much an increase in gas prices might deter commuting and sprawl depends largely on the amount of the increase versus the need for less gas by newer and more efficient motor vehicles, as well as the salaries of the commuting professionals and whether the company includes rising gas costs in employees compensation.

Are "super commuters" willing to pay the price or forced to? What if, as Jon writes in his next article, our nation had invested in rail and other infrastructure...much nicer commutes could be had between Phoenix and Tucson on high speed rail.

As for cheaper sprawl, it is only so because externalities aren't considered in the price. We pay much more as a society to subsidize the sprawl machine.

Oil has risen in cost, with tensions about Iran. Dan Dicker has been trading in oil instruments (options, swaps, futures) for 25 years. He claims that the speculative premium in oil is 40 dollars a barrel.

Not a judgment so much as an observation. I think that support for mass transit is fine, but there is a difference between how we'd like things to work and how things actually do, and it's important to base analysis of "real world events" on the latter.

Only about two percent of Phoenix commutes involve mass transit. That's abysmal. But there are reasons why sprawl occurs and why companies like Apple favor locations in the suburbs rather than downtown (whether in Phoenix or Austin) and they should not be ignored in analyses of company behavior. So too must a similar dynamic be considered when evaluating the behavior (present and future) of actual and potential homeowners and migrants.

Phoenix is built on the model of cheap land = cheap housing and single-family homes. The cheap land is in the suburbs and exurbs for reasons involving basics of supply and demand, as well as infrastructure (its presence or absence) and development costs.

I don't think that gasoline prices alone will eliminate sprawl because gas prices will follow a pattern nationally whereas housing will remain cheaper where land exists for development. The housing market (particularly underwater mortgage holders) is much more significant in holding back a return to the previous model of in-migration and development, but that is temporary, even though I expect it may take ten years to correct.

When municipal expansion is restricted through geographic means (e.g., surrounding municipal borders) or by laws restricting density or land usage, then "suburbia" takes the form of surrounding municipalities and the Big Commute continues. This is true, for example, of Seattle, which sees little growth itself but which is surrounded by areas which grow and grow because they face no such restrictions (or less) and because the dynamic for growth continues to be valid. The distinction is arbitrary, because the metropolitan area takes the place of a single municipality, and sprawl exists either way.

Look also at some of the top 10 supercommuting cities mentioned in that article and you will see that over the last decade long commutes from the suburbs and exurbs have increased dramatically.

I've heard the new country of So. Sudan (or whatever it is called) has STOPPED oil production because No. Sudan has been using the monies for itself and not passing it along -- in addition to continuing religious and ethnic cleansing in disputed areas. That is 6% of Chinese imports so now they have to get it elsewhere...

Sudanese oil exports to China are down, but the Saudis have increased theirs: so have Iraq, the UAE, Kuwait, and Russia.

China has also cut imports from Iran to show its displeasure with tough Iranian bargaining terms. If it can afford that sort of political brinksmanship, it probably is getting all the oil it needs from other sources (which are numerous).

Associated Press reports that the Chinese government just raised gasoline prices for the second time in two months. However, the government is concerned that the economy will overheat, so it is targeting lower growth (just 7.5 percent this year, instead of the 8.9 percent annualized rate seen in the last three months of 2011). The Chinese government is also trying to reduce speculation in the housing market, and home prices in 45 cities have dropped as a result.

The real news, for me anyway, is that BHP Billiton, a mining company, predicts that Chinese use of iron ore has maxed out: it predicts about the same use in 2020 as today. Iron ore is the main component in steelmaking, of course, so that seems to say something (not sure what, yet) about the Chinese manufacturing sector.

The index measures the percentage of individuals ages 25-64 who do not own a business in the first month, who own a business in the next month and devote 15 or more hours of work.

Note that the index for high-school dropouts is higher than for other groups, as is the growth in the index since the recession, suggesting that these are not "entrepreneurs" (where would high-school dropouts get the capital?) but rather, desperate individuals who cannot find work and as a consequence "hire themselves". Nothing in the requirements (and I'm not sure how "new business" is determined except as an unverified response in a survey -- check this) suggests that the business must be successful or that stuffing envelopes as a free contract agent, etc. is excluded from the "businesses".

The index for high-school dropouts was 0.42 percent in 2007 and 0.57 in 2011; for high-school graduates it was 0.30 and 0.33 respectively (a much smaller increase); and for college graduates it was 0.33 and 0.29 respectively, a decline. See Table 5, p. 15 of 32.

Interesting footnote:

1. The U.S. Census Bureau notes that the definitions of nonemployers and self-employed business owners are not the same. Although most self-employed business owners are non-employers, about a million self-employed business owners are classified as employer businesses.

Thanks for deconstructing the "innovators" story, Emil. I go back to this eye-opening story in the Business Journal of maybe six years ago that showed metro Phoenix actually had fewer startups per 100,000 residents than any peers. It was something like 32nd in the nation. Phoenix is many things. It does not have an ecosystem for genuine startups, much less innovation.